Launch Partners

Tuesday, June 18, 2024

Launch Partners

Investors bet on alternatives and impact-focused opportunities as the world moves to sustainability and energy freedom

Bad news for markets is good news for alternative investments
A volatile stock market, four-decade high inflation, raising interest rates and geopolitical tensions this year have stunted the global market and contributed toward a dramatically changing role of alternative investments. Investors relying on the traditional game have experienced a serious decline in their portfolios and now have to refocus on alternatives to further diversify portfolios and protect against stubborn inflation and possible recession. While stocks usually go down during recession, alternative assets can successfully protect capital in down markets and potentially reduce overall portfolio risk as well as increase in value, which will provide steady income and maximize returns. In this light, why are they ‘alternative’? These should be core investment opportunities particularly with the world focused on conversion to renewable energy and sustainability.

Impact-focused projects are just that, intended to make a difference; with global opinion looking for new technologies, the investment landscape is changing dramatically.

Focus on impact investing and green energy
Impact investing, defined as the intention to generate measurable social and environmental impact alongside a financial return, is on the rise. The Global Impact Investing Network estimated the global impact investing market to top the US$1 trillion mark. The enormous demand for impactful projects related to energy transition is fueled by new laws and regulations, carbon targets and shifting consumer behavior toward sustainability. However, despite the growth, there is still an enormous need for capital. Such shortage brings new investment opportunities in renewable asset classes, for example, green hydrogen.

Al Waseelah, a fully Shariah compliant Sukuk issuance platform, with the help of Shariah advisor Yasaar Research, has helped to create the Orestes Hybrid Hydrogen Opportunities, an actively managed impact portfolio of IPCEI-qualified companies that operate in green and turquoise hydrogen markets. IPCEIs are ‘important projects of common European interest’ and have been selected by the EU as companies which merit direct investment because of their potential for high impact.

The result? A Shariah compliant special purpose acquisition company-like portfolio which will use a green impact investment strategy to scale up the hydrogen economy. It is a market-first financial instrument dedicated to scaling up ‘Hydrogen Valleys’ in Europe by investing in emerging hygrogen tech (H2 tech).

Investing for energy freedom by 2030
The EU has established a first major goal to commercialize H2 tech in line with the European Hydrogen Backbone by 2030. The European Climate Law, which is a part of the Green Deal (a long-term growth plan to make Europe climate-neutral by 2050), is a legally binding commitment to reduce net greenhouse gas emissions by at least 55% by 2030. Europe is a climate frontrunner and progressive on expanding the green energy sector, and sets a model for the rest of the world. New technologies require particular expertise to make them successful. The EU designation as an IPCEI is an important step in the recognition of potential future market leaders. In addition, Orestes has engaged with leading technical analyst Natural Power to assist in identifying those companies which have the greatest potential to make the biggest impact. The investments which will form the Orestes portfolio will also be able to provide their technologies to the global marketplace to further the progress of hydrogen delivery. With an initial focus on mobility solutions, Orestes will play a major role in supporting the global goals for renewable energy. This is a global matter; Australia has a number of initiatives and most notably, Saudi Arabia plans to become the largest global supplier of hydrogen with the UAE intending to compete.

Providing access to impact-focused opportunities
The impetus for a rapid clean energy transition has never been stronger. Hydrogen, particularly green hydrogen, can play a strategic role in the decarbonization of the global energy supply, complementing direct electrification. Investing in hydrogen is a long-term investment in the future of an energy-efficient world and ‘Orestes Hydrogen Hybrid Opportunities’ is the only product in the market that provides access to what will be the biggest energy investment opportunity in Europe. With a subsequent focus on liquidity and inflation-linked performance, the actively managed portfolio provides investors with the most efficient and cost-effective way to gain exposure to a diversified pool of high-impact companies. Investing in the future has never been more important.

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